According to the facts of the case, the employer of a plaintiff concluded a passenger carriage contract, which is qualified as a contract in favor of a third person. One party to the passenger carriage contract (a third person in whose favor the contract is concluded (the passenger)) is always a natural person that is one of the elements of the consumer contract.
When assessing the contractual relationships between the passenger and the carrier in terms of consumer contract elements, it should be noted that the subject matter of the passenger carriage contract is a specific service – the conveyance of a passenger to the point of destination and the recipient of this service (passenger) can only be a natural person. When assessing the passenger carriage contract according to another element of the consumer contract – the purpose of concluding a contract, it is necessary to make a difference between the purposes of a carriage itself (in the present case – flight) and personal (individual) purpose of a trip. It should be noted that the carriage as such (in the present case – flight) is a narrower concept than a trip and includes only the itinerary from the starting point to a destination point. So the subject matter of the passenger air carriage contract is a flight as such; by this agreement the personal needs of a passenger to get to the point of destination are met. That can not be regarded as being related to his trade or profession, because the purpose of a trip (i. e. his activity after reaching the point of destination) is beyond the limits of a passenger carriage contract. For these reasons, it should be stated that the passenger carriage contract is qualified as a consumer contract, the weaker party to which is a passenger, apparently being on unequal footing with the other party to the contract – the carrier.
After qualifying the passenger carrier contract as a consumer contract, the specific rules, ensuring the higher protection of one of the parties to the contract – the consumer – rights should be applied. Consumer contracts are usually concluded by accession method, using the standard contract terms, which are not individually negotiated, because of this the institute of a consumer contract is based on the protection of weaker party to the contract (consumer) doctrine, which means the restriction of freedom of the contract principle.
In the case at issue the passenger carriage contract was concluded by a way of accession, according to the standard terms, unilaterally drafted by the defendant – in paragraph 20 of the Passenger and baggage carriage rules there was set a condition, establishing the jurisdiction of all the disputes arising out of this contract to the courts of the Republic of Latvia or Riga international commercial arbitration.
Although the parties did not raise the question of the fairness of this term, taking into consideration that passenger carriage contract is a consumer contract and the protection of consumer rights should be regarded as a public interest, important not only to the consumer, but also to a large part of society, or even to society as a whole, the court decided to assess ex officio the compliance of this contract term according to the fairness criteria.
When assessing the term of the contract on jurisdiction, the court concluded that the term of the consumer contract, stating that the disputes, arising from this contract have to be heard in the courts of the residence of the carrier (the stronger party to the contract) restrict the consumer choice, obligates him to litigate before the court of service provider residence country and in such way violates the balance of rights and interests to the detriment of the consumer, restricts his ability to bring an action, because can cause unreasonable costs, especially when suing for a relatively small amount of compensation, as in the present case. The court decided that this kind of a consumer contract term meets the conditions set in the Article 6.188 part 2(18) of the Civil Code and should be considered as unfair.